If ever there was a sign that a recession is on or drawing near it would be the recent fall in consumer confidence and the resultant fall in the level of employment. To stave off any unnecessary speculation and increased talk of economic problems, the Federal Reserve announced a broadening of the term auction facility available to banks. This however has not stopped the belief that there is serious problem ahead.
The bureau of Labor announced that payrolls for the month of February fell by Just about 63,000 and this is seen by many economists as a serious sign of things to come. This fall in jobs is the largest it has been for almost five years. It certainly is a much bigger drop than what many analysts had expected and surely is in no way close to January’s 17,00 job loss. In spite of this fall in payrolls there was a fall in the unemployment rate, which now stands at 4.8%. Many analysts had expected the rate to be 5%. The fall in unemployment is somewhat deceptive as it could really be a reflection of the fact that many people have stopped looking for a job thus would not be accounted for in the calculation of the unemployment rates.

This situation is of great worry to consumers as they are not so optimistic about the future. They are no longer as confident in their job security. This coupled with the housing crisis where the value of homes is free falling, the rise in the cost of food items, and the continued rise in the price of energy has left many consumers feeling beaten down. This is not helped by the stricter lending standards or the buoyant stock market.

With the Federal Reserve set to make available more capital to the tune of $50 billion in two Term Auction Facility auction in March. Larger amounts will be made available as needed according to the Fed. They Fed will also start up a number of term repurchase transactions of $100 billion. This will help out many banks that are in serious need of assistance. Whether or not this will be enough to keep the banks, consumers and the economy afloat is still to be seen.

The continued fall in the dollar on the world market is making many consumer items and raw materials more expensive. Therefore everyone is feeling the crunch and job losses are just a small part of the bigger picture.